Investing on the Cheap with Exchange Traded Funds

In a recent USA Today article, Exchange traded funds are a low-cost way to build portfolio, John Waggoner does a great job of outlining the benefits of ETFs, advising what to steer clear of and provides sound model portfolios.

“one of the biggest advantages of ETFs is cost. Many ETFs charge 0.5% a year or less in expenses. That’s $50 a year on a $10,000 investment, less than it would cost to retread a tire.”

Luckily, with the range of ETFs available on the market today one can easily construct a diversified portfolio with a robust asset allocation. “You can use broad-based, low-cost ETFs to build a solid portfolio on the cheap.”

Bottom line, with the way the economy is going, one can not ignore the cost benefits of an ETF. “Over the long term, ETF investing in basic, low-cost portfolios can save you thousands — or tens of thousands — of dollars. Why give it to a fund manager if you can keep it yourself? Even if you’re not a cheapskate, you can appreciate that.” Give them a try.